The financial objective for public hospitals should be to generate a sufficient surplus from operations to meet their financial obligations, and to fund asset replacement and new asset acquisitions. The ability of public hospitals to achieve this depends largely on how well they manage their expenditure and whether they maximise revenue. The performance is measured by the operating result—the difference between revenue inflows and expenditure outflows.
This Part covers the results of the audits of the 2010–11 financial reports of 87 public hospitals and 25 associated entities.
Independent audit opinions add credibility to financial reports by providing reasonable assurance that the information reported is reliable.
Public hospitals provide complex acute care, prevention, early intervention and primary care, aged care and mental health services.
While metropolitan and regional public hospitals largely provide acute health services, they also provide a mix of mental health, sub-acute, community health services and aged care programs. Rural public hospitals generally offer a higher proportion of aged care and community health services.
This report covers the results of our financial audits of 112 entities within the public hospital sector, comprising 87 public hospitals and the 25 entities they control. It informs Parliament about significant issues arising from the audits and augments the assurance provided through audit opinions included in the entities’ annual reports.
This report comments on the quality and timeliness of financial reporting, the financial sustainability of public hospitals and the effectiveness of procurement practices and information technology security.
Ordered to be printed
VICTORIAN GOVERNMENT PRINTER November 2011
PP No 84, Session 2011–12
In accordance with section 16(3) of the Audit Act 1994 a copy of this report was provided to the Department of Education and Early Childhood Development, the Department of Treasury and Finance, the Holmesglen Institute of TAFE and the Victorian Skills Commission with a request for submissions or comments.
Responses were received as follows:
A complex series of events led up to the decision by Holmesglen Institute of TAFE (Holmesglen) to make a loan to a Registered Training Organisation (RTO), as the first step in an acquisition strategy, and continued until the final arrangements were made for settlement of the loan.
The key events are set out in Figure A1 along with the issues and themes raised for the major parties involved; Holmesglen, Skills Victoria and the Department of Treasury and Finance (DTF).
The vocational education and training (VET) sector has changed substantially over time with the most fundamental reform being the transition to the fully contestable VET market over the past decade.
Over the past decade Technical and Further Education (TAFE) institutes have been encouraged to grow cash reserves by being entrepreneurial. In this context the Holmesglen Institute of TAFE (Holmesglen) entered into a financial arrangement with a private Registered Training Organisation (RTO). The investment raised critical issues about the legal framework and the exercise of financial prudence in the TAFE sector. The transaction ultimately resulted in a loss of $3 million of public funds.